With ESEA trading at a 50% discount to peers on a price/earnings basis, it would seem there is a significant amount of value locked up in the shares at this time. Wachovia estimates that a purchase of any 15-year-old handymax container ship would add $0.10 per year to earnings. With several acquisitions like this likely to occur in the next year, earnings could be significantly higher than currently estimated.
The last reporting period was the fourth quarter in which Euroseas earned $0.55 per share. Management announced an increase in the quarterly dividend for the first quarter of 2008. Shareholders will receive 30 cents per share representing a nearly 9% dividend yield. The dividend has been moving steadily higher over the course of the last 2 years as a public company.
Management has stated a willingness to leverage its portfolio up to 50% which could lead to purchases of up to $400 million. Since issuing the additional stock, management has inspected 10 ships as potential targets but has yet to make an announcement about a purchase of any one of these vessels. Such an announcement would likely be a catalyst to push the stock above its current range.[1]
- ↑ http://zachstocks.com/2008/04/euroseas-ltd-esea-old-ships-bring-new-profit/
